Luanda - one of the most expensive cities for expat employees

When you think of some of the world's most expensive cities, the dusty Angolan capital of Luanda seems an unlikely contender.

Potholed, chaotic and still scarred by decades of civil war, Luanda has little of the glitz and glamour of Tokyo (currently the world's most expensive city for expats), New York or Moscow, and an estimated half of Angolans live on less than $2 a day. But, according to a recent BBC report, despite the obvious poverty and sprawling slums, Luanda still manages to boast some eye-wateringly high prices.

A house can be $10,000 (£6,500) a month to rent, a basic meal out for two is easily $50, a hotel room can weigh in at $400 a night and a kilo of imported tomatoes a staggering $16. A basic saloon car without a driver (which foreigners need to negotiate the difficult traffic and parking) will be $90 a day, but upgrade to a SUV (recommended due to the poor quality roads) and you're looking at $200. It is prices like these that in recent years have seen Luanda top expatriate-cost-of-living surveys by agencies such as Mercer.

So why is a city like Luanda so expensive?

There are several reasons. The main one is that Angola lived through a long civil war which started in 1975, when the country gained independence from Portugal, and continued right up until 2002. During that time most industry, agriculture and local production stopped and basic infrastructure including roads, railways, electricity lines and water supplies were badly damaged. Having once been a major exporter of products like coffee and cotton, and self-sufficient in most foods, Angola now imports an estimated 80% of its consumable goods. For every tin or packet of food you buy in Luanda, you must factor in the cost involved in getting that product to Angola and onto the supermarket shelf, via a congested port with its highly bureaucratic customs and a traffic-clogged city.

There is some good news, though - property prices may have already peaked. As more construction is being done, there is more accommodation available and prices are coming down. In some cases, apartments are 50% cheaper than they were three years ago, and that trend will only continue as more housing is built.

However, expats are still renting apartments in the newly-built suburb of Talatona for as much as $15,000, and family homes in that area start from $6,000 a month going up to $30,000, depending on the type of the compound and its facilities. The post-war flood of expatriates into Luanda, many working in the booming construction and oil sectors definitely inflated prices.

But according to some expats, prices have come down in the past 18 months, not just property but in supermarkets as well, mostly due to increased competition.

It will be interesting to see whether Luanda retains its position as one of the world's most expensive cities for expats.

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